Protests take toll on home prices

Editorial | Mary Ma 6 Sep 2019

As Chief Executive Carrie Lam Cheng Yuet-ngor withdrew her controversial fugitive extradition bill - completing a U-turn that took three months to finish - some homeowners promptly took their flats off the secondary property market.

They're banking on Lam's gesture paving the way for housing prices to surge. More than likely, that's just wishful thinking.

Not long after Lam's underwhelming speech was televised on Wednesday, protesters returned to the streets to surround police and MTR stations. The popular belief is that if the bill withdrawal had been made in June, the protests would have quickly petered out.

Instead, protesters are now demanding more, including democratic reforms to allow the public to elect their chief executive and lawmakers by universal suffrage - a key demand that will undoubtedly be rejected by Beijing for now.

The stock market's strong rally - by about 1,000 points - as investors got prior wind of Lam's announcement, was temporary. After getting stuck listlessly amid the escalating Sino-US trade war and anti-government protests, any good news would be read disproportionately.

If the step from declaring the bill dead to officially withdrawing it was small, the 1,000-point rally marked the biggest gain in 10 months.

JPMorgan's forecast for the SAR's property market may be gloomy but substantiated. Whether local home prices will plunge up to 30 percent in the worst case scenario, as predicted by the US investment bank, is a matter of opinion. But the general consensus is negative overall.

The ongoing trade war between the United States and China has placed Hong Kong-based manufacturers dependent on mainland factories for production under extreme pressure.

I heard recently that a SAR-listed trader had to downsize its office and move from Wan Chai to Shau Kei Wan in order to keep itself afloat. Stories of property buyers refusing to come to town despite offers of free air-tickets and hotel accommodations weren't uncommon. All these have to do with the US tariffs imposed on Chinese goods.

No wonder Financial Secretary Paul Chan Mo-po couldn't afford to wait until his budget speech to roll out assistance for small and medium firms.

During the good times, manufacturers were willing to invest in properties to gain from rents and appreciation in real estate. Will they continue to be as active in the property market as before - when they are running out of orders? The answer is obvious.

The chief executive said she's willing to do whatever possible to resolve deep-seated conflicts in society. If she means what she says, she must tackle the housing problem seriously.

Will she take a cue from one of her predecessors, Tung Chee-hwa, even though he has been cursed for years over his 1997 housing policy to provide 85,000 units a year?

Compounded by the Asian financial crisis and IT bubble burst, Tung's policy was blamed for housing prices correcting steeply.

Now caught between Washington and Beijing in their ongoing trade war, and a sea of anti-government protests, what's missing is a housing policy to provide 85,000 or even more new flats a year.

This would help Lam complete a task that she has been unable to achieve so far.

However, that seems to be mission impossible.

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